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McDonald's ruling ignites business-labor firestorm

A new ruling issued by the National Labor Relations Board could change the model for franchises nation-wide. The NLRB's General Counsel ruled on Tuesday that McDonald's (MCD) now holds joint responsibility for how its employees are treated.
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Labor advocates are claiming a big victory after a federal agency said Tuesday that McDonald's central, corporate operations can be lumped in with its thousands of franchises for liability purposes.

The world's largest fast-food chain promises to fight a National Labor Relations Board decision that it says "changes the rules for thousands of small businesses."

"HUGE victory for labor & fast food workers!" tweeted the Service Employees International Union. The union was responding to news as relayed in a The New York Times report that McDonald's corporate apparatus must address workers' complaints that they were fired or disciplined for participating in protests calling for higher wages.

U.S. Chamber of Commerce spokesman Randy Johnson says in a news release the NLRB move "upends existing law and is part of a larger agenda at the NLRB to overturn the joint-employer standard."

Another Chamber exec, Glenn Spencer, calls it "a ploy that could threaten nearly 800,000 franchise businesses and the millions of people who work for them."

The key phrase in the NLRB decision is "joint employer" -- that's the term that the agency's general counsel, Richard Griffin Jr., says can apply to the corporate entity, thus linking it to the franchises. Griffin is a former NLRB board member and served on the board of directors for the AFL-CIO lawyers coordinating committee.

The NLRB has determined that 43 of 181 complaints filed since November 2012 have merit to proceed, the agency says on its website. Of those "43 cases where complaint has been authorized, McDonald's franchisees and/or McDonald's, USA, LLC" -- the central, corporate entity -- "will be named as a respondent if parties are unable to reach settlement."

It is not clear from the NRLB statement how many of the cases involve franchised locations. Sixty-eight cases were found to have no merit, while "64 cases are currently pending investigation," the NLRB says.

Protests over pay at McDonald's have gained traction in recent months. SEIU President Mary Kay Henry was among those arrested in a protest preceding McDonald's shareholders meeting in May. Several McDonald's workers -- among a crowd brought in by 32 buses, police said -- were arrested as well.

The Rev. Dr. William Barber II, head of the NAACP's North Carolina chapter, led the protest march onto McDonald's headquarters campus in Oak Brook, Ill., telling USA TODAY that a "living wage is a moral mandate, and it's time for McDonald's to pay fast-food workers their just due now."

McDonald's has about 3,000 franchises in the U.S., according to the company's website. The company has a total of about 14,000 restaurants in the U.S.

"Wrong" is McDonald's way of describing the decision.

"McDonald's also believes that this decision changes the rules for thousands of small businesses, and goes against decades of established law regarding the franchise model in the United States," says Heather Smedstad, speaking on behalf of the company.

Smedstad, senior vice president over human resources in the U.S., says in a release that the fast-food giant "as well as every other company involved in franchising, relies on these existing rules to run successful businesses as part of a system that every day creates significant employment, entrepreneurial and economic opportunities across the country."